Archive for the ‘media’ Category

Why the New York Times Should Stop Selling the News…

I’m sorry to everyone for being away from a while… I am writing some new research on product launches and studying for my graduate school exams, so I haven’t had the time to keep this up-to-date.

However, I am still posting sporadically on my Quoting Tumblog and updating my favorite news stories in this blog’s sidebar.

That said, the New York Times continuing poor financial performance has led many to discuss new business strategies for the firm. Since I am a loyal Times reader and do not want to see it disappear, I want to add my two cents from a product perspective…

The New York Times should (slowly) refocus it’s business away from providing the news. Why? Because the NYT’s competitive advantage lies in its opinion editorials.

Two elements make a good news story…

  1. What you cover, and
  2. How you cover it.

The “what” includes the key facts of the story, while the “how” involves the discussion and insight the author adds. Both elements are important to any news story, but they are not mutually-exclusive.

The “what you cover” is easy, and everyone with access to a computer (or even a mobile phone) and a blog account can cover the news. Therefore, the leaders in the news are the people who can get it to you the fastest. With all of the bureaucracy and editorial barriers baked into a newspaper, the Times will never be the first out of the gate. Their publishing cadence could never be as quick as the 24-7 news stations, bloggers, and services like Twitter and Outside.In.

The newspaper is not the best way to get late-breaking news stories. A few months back, there were rumors around my office that a fire has closed DC’s metro lines, and some people were trapped in between stations. To see what was happening, I search “red line fire” on Summize (now Twitter Search) to see if anyone was tweeting about it. Sure enough, some people were talking about the fire and linking to a few relevant sources.

By the time I knew what had caused the fire, it was 9am that morning. A newspaper couldn’t have published this story until the next day, or at the earliest on the web, a hour or two after the incident. Because I tracked the events in real-time, I wouldn’t want to hear the facts while reading the next day’s headlines.

If the NYT is going to be a day late in recapping a story, they must give you a little bit more than just the facts. This is why we still read the NYT today… not for the headlines, but for Thomas Freedman, Paul Krugman, Maureen Dowd, and many others.

Very few news sources provide the consistent level of insight as the New York Times, and this paper’s voice is important to educating and informing the public. From a financial perspective, I agree with Silicon Alley Insider’s analysis, but from a content perspective, the paper should focus its limited resources on giving readers the opinion editorials we all love.

My Thoughts on “Freemium” Business Models

A few days ago, I read an interesting post from Andrew Parker on why freemium business models (users can pay a monthly fee to remove ads from a service) are bad for advertisiers. Here is the money quote:

Advertisers pay a premium in order to reach people in their specific demographic with disposable income. This idea of people paying to remove ads ensures that the audience for your ads are actually CHEAPER than the average internet audience.

I’d never thought about this before, but Andrew is right. Why would an advertiser pay high CPM to reach a customer who can’t (or won’t) pay to remove ads? This is a bit of a catch 22.

That said, I wouldn’t totally discount freemium (no pun intended). I still like the “upgrade to a premium version with more features or unlimited access” business model, as long as you create a premium version that is compelling enough to the customer.

In fact, Rhapsody’s freemium strategy converted me into a customer. Like most people my age, I was used to downloading music for free… Napster was hitting its peak in popularity during my freshman year of college. However, I hated Napster for two reasons: 1) the songs were of suspect quality, and 2) I couldn’t always find what I wanted. So, I decided to try Rhapsody on a recommendation from a friend. I started with the free service, which gave me 25 free on-demand streams and unlimited access to a handful of radio stations. After I used the 25 streams up in 2 days, I decided I was willing to part with $14 a month to listen to all the music I wanted, whenever I wanted it.

Even though there are many flaws to Rhapsody (no user-generated recommendations, no playlist search, nothing from Tool’s catalog…), I am now addicted. I can honestly say I would have never bought Rhapsody if it weren’t for freemium.

Making Money Through Advertising: Harder Than It Seems…

I seem to be reading a lot of articles recently on why internet services must be free. Everyone from Seth Godin to Fred Wilson makes the argument that free is the internet strategy de jour.

However, when most people think of providing a free service, most people like to fall back on one simple revenue model… sell advertising. However, building a sustainable business around internet advertising is harder than it seems.

According to some reasonable assumptions on page views and RPM (revenue-per-thousand page views), you need to find a pretty big audience before you’ve built yourself a health business. Let’s say you have a well-targeted website with an active base of users. If this is true, than a RPM of $10 is high, but reasonable. In order to build a US$25 million business, you will need over 208M page views per month. To put it in perspective, you need to be close to becoming one of comscore’s top 100 most visited sites… That’s a lot of people viewing a lot of content.

Key lesson – don’t get lazy and fall back on advertising. Get creative… if you’re smart enough to create a product that people find valuable, then your certainly smart enough to turn that value into cash.

P.S. – Lightspeed Venture Partners wrote an good article with some useful assumptions for building an ad-supported online business.

Think Creatively to Generate Revenue, and “…connections go for a premium”.

I love creativity… I have a great deal of respect for people that think about something in a new and unique way. And for this reason, I’m excited about entrepreneurship. If you have a good idea that effectively solves a problem, you will be rewarded… handsomely.

Business creativity doesn’t lie solely in product design and development. It should also be evident in your business model. I’ll be writing about this topic soon, but I don’t think people should design a great product, and then get lazy by figuring that they must monetize it through advertising.

To effectively monetize a product, you must dig deep to identify the true value, and put a price tag on it.

And, that’s just what Scripped is doing. According to a post at the Silicon Alley Insider, Scripped will provide their web-based script-writing software for free, and charge for add on services, such as “script consultations” and “brokering meetings with producers and the like”.

Now, I don’t know much about the movie business, but it seems like these guys thought hard about what a screenwriter would pay the most for… experience and expertise. Can they deliver on that promise? We’ll have to see…

Kevin Morris: Innovation in Entertainment

When I left the music business for the management consulting world, I did so because I did not like the status quo. I did not see a future for myself in a business that “does it this way because that is the way we always do it”.

After reading today’s New York Times article about Kevin Morris (the lawyer who negotiated Trey Parker and Matt Stone’s new deal with Comedy Central), I am glad to see innovation in content delivery and marketing in the entertainment is starting to become en vogue.

Hopefully, I can get some more education and experience underneath my belt and come back to the business I find so fascinating.

Social networks are a valuable asset because…

… they give companies access to a incredibly large and accurate personalized customer data set.

When MySpace was sold to News Corp, I saw the value of the purchsae not in advertising on web pages and profiles (which have become a nuisance), but in the enormous data asset of potential customer profiles that thousands of B2C companies could use.

According to the Wall Street Journal, Facebook is building an advertising system that utilizing all that data to target ads for clients. This will be great for companies and customer alike, since it should raise click-through rates, increase per-ad revenue, and improve the customers’ experience by showing ads that actually interest them.

This is interesting, but I think that an untapped revenue stream for social networks is market research. Using the data you have already collected, you could create market research consulting business that could effectively serve both large CPGs and down-market niche brands.

A Slew of Interesting Advertising Articles

This week, the New York Times has been good to us who enjoy advertising, media, and content. Here are a handful of the articles I found most interesting:

Now, the Clicking Is to Watch the Ads, Not Skip Them

They’ve Just Got to Get a Message to You

It’s an Ad, Ad, Ad, Ad World

I might do a longer post at some point about one of these articles, but I have been bogged down with “stuff”. However, I have read a lot of good stuff this week, so I may write a post this weekend.